BMG Direct Launches Data Warehousing Program

BMG Direct, New York, is gearing up to launch a new database marketing initiative designed to improve the music club's ability to communicate with its online and offline customers.

In the next three to six months, BMG will begin using a series of data marts it is developing with SAS Institute Inc., Cary, NC, a data warehouse vendor that specializes in marketing intelligence for multichannel marketing.

These data marts are miniature data warehouses that will extract specific data from BMG's warehouse and will allow its employees to access relevant information for the telemarketing channel, e-mail channel and Web site.

The data marts are designed to ultimately "give us the relevant information necessary to improve communication to the membership," said Jeff LeSueur, senior director of database marketing at BMG Direct. BMG has been working with SAS to find ways to target its members with tailored marketing messages, without bombarding them with messages from several channels too frequently.

BMG Direct has both an online and an offline presence. Its offline catalog business has more than 11 million club members in the United States and Canada. More than 4 million members have purchased online since the inception of www.BMGMusicService.com.

BMG Direct is a division of BMG Entertainment, the $4.1 billion worldwide music and entertainment division of Bertelsmann AG, one of the world's leading media companies. LeSueur could not comment on how the database marketing initiatives will be affected by Bertelsmann's recent acquisition of online music retailer CDNow Inc.

BMG has been working with SAS since 1984, but in February, BMG's SAS-based data warehouse became fully operational. With an SAS data warehouse, decision makers can analyze customer behavior via marketing intelligence, uncover trends and use that information to optimize their direct marketing programs. Users also can retrieve large amounts of data easily and quickly. BMG uses SAS' Data Warehouse, along with SAS' AppDev Studio, an application development suite. The company also worked with IBM on this data warehouse.

BMG's end-to-end SAS data warehouse contains 240 gigabytes of customer information. "Out of this, we are able to do a tremendous variety of things, including segmenting the membership for telemarketing programs and for e-mail purposes, as well as summarize sales information and present it to marketers and analysts in a browser environment," LeSueur said.

He said the data marts under development will have all information on all promotions and responses from members on all channels, to make sure that "if a member has just responded to a telemarketing call, I don't think it would be appropriate to send [him] an e-mail communication immediately thereafter," he said.

"Testing will show what mix of communication, to which channel, to which group is appropriate. ... One of our goals is to avoid communication beyond the point of saturation."

BMG's solution, LeSueur said, will enable the company to deal with a major challenge in database marketing today: "multichannel management, or communication along the right channel at the right time with the right message."

He said the issue of multichannel management becomes even more challenging "when people recognize the dramatic potential offered by interaction management on the e-mail channel. This channel is more challenging to manage because there is great deal of flexibility associated with it."

As part of the database marketing initiative, BMG will expand its e-mail marketing efforts to include, for example, e-mail communication to preferred -- or more active -- members. These e-mail promotions were previously limited to periodic "one-day sales" promoted to all opt-in e-mail members.

LeSueur said that while these promotions are well-received -- and that preferred-member marketing communication is an appropriate customer relationship management technique -- BMG is concerned about "bombarding our members with bulk-oriented e-mail communications."

As a result, LeSueur said, "We've got to establish some kind of content of value to the member, find out what it is that people respond to, segment the information accordingly, and then begin to do more tailored marketing communication."

Online members of BMG Direct create their own user name and password instead of using an account number to help personalize the electronic retail experience. Once logged in, members receive personalized pages that reflect their musical interests, including sales offers and product recommendations.

The Web site contains exclusive features not available in the catalogs, such as a listing of real-time best sellers, a complete list of BMG's 12,000 titles (rather than the 16-page paper-based mailing, which includes 500 to 600 titles), customer account history, special clearance products and real-time pricing.

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